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2d 178
William Sheffield, Santa Ana, Cal. (James B. Andres, Santa Ana, Cal.,
with him on the brief), for defendant-appellant.
Tena Campbell, Asst. U.S. Atty., Salt Lake City, Utah (Brent D. Ward,
U.S. Atty., and Samuel Alba, Asst. U.S. Atty., Salt Lake City, Utah, on the
brief), for plaintiff-appellee.
Before SETH, Chief Judge, HOLLOWAY and BARRETT, Circuit
Judges.
PER CURIAM.
The appellant, John K. Elliott, appeals his conviction under 15 U.S.C. 645(a)
for making a false statement to the Small Business Administration. On appeal
the defendant argues that the submission of a sight draft or check signed by a
third party-an individual-is not a "statement" under 15 U.S.C. 645(a), and that
the indictment returned is insufficient because it does not allege conduct which
is proscribed by the statute.
The Small Business Administration approved and the Bank of Salt Lake funded
a loan to the defendant for $275,000. The defendant pledged as collateral both
real and personal property. About two years later the defendant was unable to
make regular payment on the loan, the loan was placed in liquidation, and the
defendant tendered "peaceful possession" of all pledged collateral to the Small
Business Administration. Later the same month the defendant submitted a
check payable to the Bank of Salt Lake and to the Small Business
Administration in the amount of $257,000. The check on a draft form was
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"(Making)
any statement knowing it to be false ... for the purpose of obtaining for
himself ... any loan, or extension thereof by renewal, deferment of action, or
otherwise, ... or for the purpose of influencing in any way the action of the (Small
Business) Administration ...."
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At trial the defendant moved to dismiss the indictment on the ground that it was
fatally deficient because it did not allege conduct which was prohibited by 15
U.S.C. 645(a). The defendant argued that since the indictment did not allege
the substance of any purported false statement made by the defendant 15 U.S.C.
645(a) was not violated. The trial court denied the defendant's motion finding
that the intentional submission of a bad check of a third party could constitute a
"false statement" under 15 U.S.C. 645(a). We must reverse because the
indictment was not sufficient to charge an offense.
The traditional criteria for testing the sufficiency of an indictment are whether
it contains the elements of the offense charged and apprises the accused of the
nature of the charge so as to enable him to prepare a defense and to plead the
judgment in bar. Russell v. United States, 369 U.S. 749, 82 S.Ct. 1038, 8
L.Ed.2d 240. These principles are embodied in Fed. R. Crim. P. 7(c)(1) which
requires that an indictment be "a plain, concise and definite written statement of
the essential facts constituting the offense charged." Thus, the indictment
should lay out the elements of the charge and the factual circumstances
underlying them. United States v. Radetsky, 535 F.2d 556 (10th Cir.); Mims v.
United States, 332 F.2d 944 (10th Cir.).
The indictment here concerned was cast in the language of 15 U.S.C. 645(a)
and assumes that the delivery of the check constitutes a "statement" under the
statute. Thus the indictment alleges that the defendant presented as a payment
on a loan a check signed by a third party knowing it to be worthless. Without
further allegations in the indictment a violation of 645(a) was not described as
the conduct alleged did not constitute the making of a statement.
10
"Although
petitioner deposited several checks that were not supported by sufficient
funds, that course of conduct did not involve the making of a 'false statement,' for a
simple reason: technically speaking, a check is not a factual assertion at all, and
therefore cannot be characterized as 'true' or 'false.' Petitioner's bank checks served
only to direct the drawee banks to pay the face amounts to the bearer, while
committing petitioner to make good the obligations if the banks dishonored the
drafts. Each check did not, in terms, make any representation as to the state of
petitioner's bank balance. As defined in the Uniform Commercial Code, a check is
simply 'a draft drawn on a bank and payable on demand,' 3-104(2)(b), which
'contain(s) an unconditional promise or order to pay a sum certain in money,' 3104(1)(b). As such, '(t)he drawer engages that upon dishonor of the draft and any
necessary notice of dishonor or protest he will pay the amount of the draft to the
holder.' 3-413(2). The Code also makes clear, however, that '(a) check or other
draft does not of itself operate as an assignment of any funds in the hands of the
drawee available for its payment, and the drawee is not liable on the instrument until
he accepts it.' 3-409(1)."
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approach to the construction of criminal statutes. The Court has emphasized that
'when choice has to be made between two readings of what conduct Congress has
made a crime, it is appropriate, before we choose the harsher alternative, to require
that Congress should have spoken in language that is clear and definite.' "
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The Government here urges that the defendant represented or implied that the
check was good-that the third person who signed it had the funds on deposit.
This argument was also made in Williams v. United States, --- U.S. ----, 102
S.Ct. 3088, 73 L.Ed.2d 767, as to the drawer, and of it the Court said:
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Thus the judgment must be reversed and the case is remanded with the
direction to set aside the conviction and to dismiss the indictment.
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IT IS SO ORDERED.